In this article, we discuss the 10 new stocks Reddit’s WallStreetBets is buying. If you want to skip our detailed analysis of these stocks, go directly to 5 New Stocks Reddit’s WallStreetBets is Buying.
Internet platform Reddit became perhaps the single most disruptive force at the stock market this year as retail investors use the forum to strategize and discuss investments. The company recently released yearly statistics that outline how far the platform has come in the past twelve months. According to data released by Reddit, there are over 100,000 communities on the platform inhabited by 430 million users. So far this year, there have been 366 million posts on Reddit and over 2.3 billion total comments.
The most interesting thing about the yearly review is that the three most popular posts on Reddit all feature on the WallStreetBets forum. The forum, which has more than 11.3 million members, is the platform of choice for retail investors who famously utilized it for the GameStop and AMC Entertainment short squeezes earlier this year. Institutional investors like hedge funds, which took a multi-billion dollar hit from the short squeezes, have been monitoring the platform since to stay one step ahead of the game.
Some of the stocks presently trending on Reddit include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), among others discussed in detail below.
Photo by Adam Nowakowski on Unsplash
Our Methodology
These were selected based on the hype around the companies on the WallStreetBets forum. The analyst ratings and business fundamentals of each stock are also discussed to provide readers with some informed context for their investment choices. Hedge fund sentiment was included as a classifier as well.
The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
New Stocks Reddit’s WallStreetBets is Buying
10. MicroVision, Inc. (NASDAQ:MVIS)
Number of Hedge Fund Holders: 6
MicroVision, Inc. (NASDAQ:MVIS) makes and sells lidar sensors used in automotives. The stock has returned more than 150% to investors over the past twelve months, primarily due to retail investor interest in the company.
MicroVision, Inc. (NASDAQ:MVIS) recently beat market expectations on earnings per share for the third quarter by $0.03. The revenue over the period was up 16% year-on-year. The firm said that the cash used in operations between June and September was up $7 million year-on-year.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in MicroVision, Inc. (NASDAQ:MVIS) with 1 million shares worth more than $12 million.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), MicroVision, Inc. (NASDAQ:MVIS) is one of the stocks attracting the attention of retail investors.
9. BlackBerry Limited (NYSE:BB)
Number of Hedge Fund Holders: 20
BlackBerry Limited (NYSE:BB) provides security software and related services for enterprise clients. BlackBerry Limited (NYSE:BB) recently announced that it had partnered with analytics firm Deloitte to help companies secure their software supply chains through mission-critical applications.
BlackBerry Limited (NYSE:BB) stock has rallied in the past five days as interest in the company on the WallStreetBets forum translates into real-time interest in the stock at the market, propelling a mini-rally rally in the share price.
Among the hedge funds being tracked by Insider Monkey, Canada-based investment firm Fairfax Financial Holdings is a leading shareholder in BlackBerry Limited (NYSE:BB) with 46 million shares worth more than $454 million.
8. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 23
Upstart Holdings, Inc. (NASDAQ:UPST) owns and runs an artificial intelligence-based lending platform. In October, the company had revealed that it would be launching Auto Retail, a software system that would include cars from over 33 top brands and have AI financing.
In October, Upstart Holdings, Inc. (NASDAQ:UPST) had announced that it collaborated with Abound Credit Union, the largest credit union in Kentucky, to expand loan access in the state through all-digital lending.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Third Point is a leading shareholder in Upstart Holdings, Inc. (NASDAQ:UPST) with 12.4 million shares worth more than $3.9 billion.
In its Q2 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
7. HealthEquity, Inc. (NASDAQ:HQY)
Number of Hedge Fund Holders: 26
HealthEquity, Inc. (NASDAQ:HQY) provides tech-enabled health services. The company has a market cap of $3.5 billion and posted $733 million in revenue in the last fiscal year. There has been a lot of interest in the firm on Reddit during the earnings season.
On December 8, investment advisory Deutsche Bank maintained a Buy rating on HealthEquity, Inc. (NASDAQ:HQY) stock with a price target of $52. George Hill, an analyst at the advisory, issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Echo Street Capital Management is a leading shareholder in HealthEquity, Inc. (NASDAQ:HQY) with 1.9 million shares worth more than $126 million.
6. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 32
Chewy, Inc. (NYSE:CHWY) provides ecommerce services with a focus on pets. The company recently posted mixed earnings and lowered 2022 guidance. Wedbush analyst Seth Basham cut his price target on the stock to $55 from $70, citing supply chain concerns.
However, Raymond James analysts said that they expect long-term growth at the company fueled by an increased spending on digital channels for pet care.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Zevenbergen Capital Investments is a leading shareholder in Chewy, Inc. (NYSE:CHWY) with 1.1 million shares worth more than $77 million.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Chewy, Inc. (NYSECHWY) is one of the stocks on the radar of growth investors.
In its Q4 2020 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Chewy, Inc. (NYSE:CHWY) was one of them. Here is what the fund said:
“One of our investment themes over the last several years has been the “humanization of pets,” which refers to the increasing amount of time and money that people are devoting to their animals. This theme has become even more evident during the pandemic, as many families and individuals have adopted pets while spending more time at home. Today, more than 85 million US households have pets. In 2015, roughly 7% of pet products in the U.S. were bought online. By 2019, that number had increased to 22%. Moreover, the pandemic has caused pet parents, new and experienced alike, to sign up for delivery of pet supplies in order to avoid trips to physical stores. 72% of pet owners made at least one online purchase for their pets in the past 12 months and 39% of those were subscription-based purchases.
Chewy (tkr: CHWY) is the largest pure-play pet “e-tailer” in the world, offering “the personalized service of a neighborhood pet store combined with the convenience and speed of e-commerce.” The company was founded in 2011 and was bought by PetSmart in 2017, for $3 billion. In June, 2019, Chewy went public. All of its sales are currently U.S.-based. The company has co-headquarters with one facility in Dania Beach, Florida and one in Boston, Massachusetts, and employs about 12,000 people. Chewy offers a selection of high-quality pet food, treats, supplies, and pet healthcare products.
In addition to one-time sales, Chewy is creating a recurring revenue model through its “autoship” program. This is essentially a subscription service for products that are sent at intervals specified by customers and includes such items as food and medicine. Customers are more profitable the longer they stay with the company, as their “lifetime value” grows. The company is organized around providing an exceptional customer experience. Chewy has 10 fulfillment centers scattered across the US, which enable cost-efficient overnight shipments to about 80% of the U.S. population and cost-efficient two-day shipments to nearly 100%. This allows Chewy to provide excellent service to the company’s more than 12.7 million active users.
Chewy’s ability operate profitably in the future hinges on two key variables: growing its customer base and more efficiently managing its fulfillment costs through automation of its fulfillment centers, thereby decreasing labor costs. Chewy has a smart, experienced management team and the company is expected to become profitable at the end of this fiscal year.”
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Disclosure. None. 10 New Stocks Reddit’s WallStreetBets is Buying is originally published on Insider Monkey.
